More Fiber M&A: euNetworks Scoops Up LambdaNet

May 19th, 2011 by · 8 Comments

Another opportunistic fiber M&A happened today, but this time it was over in Europe.  euNetworks (SIN:H23, news) is nearly doubling its weight with the purchase of LambdaNet from 3U Holdings.  LambdaNet's network lies mostly in Germany, with a bit in both the Czech Republic, Denmark, and Austria.  That includes metro networks in Frankfurt, Munich, Dusseldorf, Hamburg, and Copenhagen - the last of which will be a new market for euNetworks.  LambdaNet also operates 25 data centers across the region.

Overall, the LambdaNet purchase complements euNetworks footprint nicely by adding muscle in its German markets while extending coverage further to the east and north.  The price is €27M in cash plus the assumption of €7.8M in debt and about €10m in capital leases, for which euNetworks is apparently adding about €37M in revenue and €10M in 2011 EBITDA before cost savings.  Yes, that does appear to be about 4xEBITDA before synergies - prices apparently aren't so high across the Atlantic.  And there surely will be synergies, as euNetworks has metro fiber in several German cities where LambdaNet has customers.

3U bought LambdaNet Germany back in 2004 after the bubble burst, supposedly outbidding Cogent and Interoute at the time.  Cogent had already bought the LambdaNet France and Spain at the time.  Things apparently didn't go as planned for 3U, as back then they were said to have revenues on the order of €54.  For euNetworks though, the deal could be transformative, taking their revenues up toward an annual run rate of €80M giving them needed scale on those metro assets.

I had wondered if Lambdanet might be available for some time, but actually I had thought that Interoute would be the likeliest buyer.  However, Interoute bought KPN's German fiber earlier this Spring though, perhaps they have what they want there already.  Regardless, the European fiber market appears to be finally loosening up.  Especially in Germany, as when you add in the LVLT/GLBC deal this makes three nationwide fiber networks that have changed hands in the past three months alone.  I think there will surely be further activity this year, though I'm still trying to figure out which assets are likely to be available.

To pay for the purchase, euNetworks will undertake a rights issue, as its backers in Singapore will apparently be anteing up.  The deal is scheduled to close on May 31.

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Categories: Mergers and Acquisitions · Metro fiber

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8 Comments So Far


  • Chris says:

    The question is: What network infrastructure is going to be used in future?

    As far as i know, Lamdanet´s dark fiber is not digged by Lambdanet itself, it is (mostly?) just leased from Gasline (the dark fiber subsidiary of many german gas companies).

    So will Lambdanet use the eunetwork infrastructure now? But as you recently published, eunetworks has a new network footprint in Europe – and many routes only seem to be leased wavelength or leased fiber. Strange… didn´t eunetworks buy many of the fiber assets of Viatel some years ago?

    See my comment under
    http://www.telecomramblings.com/2011/05/eunetworks-pushes-south-into-milan-reports-q1/#comment-6256

  • anonymous says:

    As far as I know euNetworks has a lot of the original Viatel fiber build in Europe and this remains the case.

    The extra network elements for low latency routes look like specialised purchases or swaps of either fiber or wavelengths or some construction, as with low latency often no single carrier has the absolute fastest route – especially when many builds were “rings” as opposed to straight lines.

    • Rob Powell says:

      My memory may be foggy, but I believe that euNetworks’ Viatel fiber was limited to their original German-Dutch-UK-French footprint, i.e. it is what hooks together the metro fiber they started with. I don’t think they have Viatel fiber on the Swiss/French routes.

  • Chris says:

    Let´s have a look at the map on http://www.eunetworks.com/our_network.html

    According to this map, Frankfurt-Duesseldorf is the only route in Germany with “owned fiber”.

    Other routes within Germany, like Stuttgart-Munich or Duesseldorf-Hamburg are only “leased fiber” and Munich-Berlin is just “leased wavelength”?

    I thought, there were fibers from Viatel (PEN 3 network) on these routes?

    • Rob Powell says:

      Nope, Viatel doesn’t go there. Here’s their footprint: http://www.vtlwavenet.com/assets/network%20A4%20size%20compressed%20small.pdf

      • Chris says:

        This topic is more tricky than it seems.

        Viatel had two networks in Germany. Circe 2 and
        Circe 3 (sometimes obviously also called PEN 2 and PEN 3).

        Circe 2 was a international network with a
        german part Duesseldorf-Frankfurt-Mannheim.

        Circe 3 was a network within Germany, connecting
        (amongst others) Frankfurt, Dusseldorf, Bremen, Hamburg, Berlin, Dresden, Munich, Stuttgart and Mannheim. This network was built together with Carrier1 and Metromedia (MFN).

        Source: http://edgar.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=2704854&SessionID=0–eH68chGNXi47 (“C. The German Network”)

        Later, Viatel sold half of Circe 2 and the entire Circe 3 (now under the names “PEN 2” and “PEN 3”) to Global Voice/EUnetworks. That´s why Viatel stills has fiber from Duesseldorf to Mannheim (they only sould half of the infrastructure on that route), but not on other german routes anymore (where they sold the entire infrastructure).

        Source: http://www.secinfo.com/d139r2.vJe.c.htm (“3. Principal terms and conditions of the Asset transfer” > “Germany”)

        The “own fiber” route Frankfurt-Duesseldorf from Eunetworks today seems to use the Circe 2 route, which is run together with Viatel.

        But what happend to Circe 3 / PEN 3?

        Eunetworks bought this network, as you can see above. Either they sold this network again (but I can´t find any information about such a deal) or they don´t need much capacity on the other routes, so they prefer leasing capacity from others carriers over running their own network?

        • Anon says:

          The ring was in a very poor state of repair since it hadn’t been maintained. The original terms of the purchase from Viatel said that euNetworks had to (a) pay to purchase the ring and (b) pay to rehabilitate it and (c) then give half the fibres back to Viatel. In short it was an abysmal deal and I cannot understand why euN accepted it.

          I would suspect that what has happened is that euN has come to the conclusion that the ring is too expensive to repair and perhaps had some sort of exit clause with Viatel they could use.

  • Chris says:

    Thanks for your comment!

    I can´t find any information in the internet, what eunetworks did with that network. That´s strange. As a listed company, they should publish such things (in my opinion).

    As I have already mentioned, this german network was built from Viatel together with Carrier 1 and Metromedia (MFN). That´s why they founded a joint venture “ViCaMe”.

    At least the ex-Carrier1 part of it is obviously active today.

    After the bankruptcy if Carrier1, this asset went to GLH and later (partially or completly?) to Cogent. So at least the ducts and fibers of the ViCaMe-Network should be ok.

    Does anyone know, what happend to the Metromedia-part of this long-haul network?

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